Suicide Coverage in Insurance: Terms, Clauses & Exclusions

Life insurance is bought to ensure financial protection for the dear ones by the policyholder. It is meant to serve as a financial shield for the deceased dependents. An individual commits suicide when that individual has no motive to live further.

The misery that people go through their lives, and the life-crushing impact it has on their families and dear ones is irreparable. In most cases, these deceased persons were only the earning members, and with their passing, the families’ monetary coverage stopped to exist.

Factors That Affect Suicide Coverage in Insurance

Life insurance companies do not cover all kinds of death. For instance, death because of murder by the nominee, criminal activity involvement, death under the alcohol influence, smoking, drugs, or because of involvement in adventure sports or other dangerous activities are not covered by this policy.

Historical Context of Suicide Coverage - Coverage Exclusion

From 1st January 2014, insurance companies began covering suicides. For all the policies that were issued before January 2014, if the insured committed suicide within a year from the policy issuance date, the policy would become void.

Changes In the Suicide Clause For Insurance Claim

But, since 1st January 2014, the suicide clause was changed to replicate the below-mentioned changes:

• Traditional Life Insurance Plans:
  • For this type of life insurance plan, if the insured commits suicide within 12 months of the policy issuance date, the nominee is permitted to get 80% of the premium paid.
• Market Linked Plans:
  • For this plan, the nominee is allowed to get 100% of the policy fund value if the insured commits suicide within the initial 12 months of the policy beginning.

What are the Terms For Suicide Coverage in Insurance?

The suicide cover is managed by the policy terms and conditions, which vary from firm to firm. Usually, insurance firms cover suicide 1 year after the policy purchase.

• In case of the suicide of the insured, the company will give the sum assured to the candidate after a thorough evaluation of the case.
• This waiting phase of a year is because of the moral risk and figures as an essential exclusion in key life insurance policies.
• If the insured suicide within the 12-month waiting time, the insurance firm might offer a percentage of the total amount paid.
• This clause is typically maintained to stop insurance fraud cases, where persons in debt buy a life insurance policy and suicide to assist their family in avoiding complicated situations.

What is Excluded from the Suicide Cover?

Suicide cover would not be valid under the following conditions:

• Within 1 year of the renewal of a lapsed plan the insured suicide.
• If the policyholder offers inaccurate or fraudulent details when purchasing the policy. 
• If the policy owner suicide, then the applicant cannot claim for it from the deceased insured employer.

Conclusion

It is essential to know that insurance firms carry out complete investigations and evaluations before disbursing suicide claims. In regards to the insured person’s family, insurance firms are dedicated to offering financial cover in case insured’s suicide death.

Also Read:

Does Life Insurance Cover Suicide?

Why Is It Important To Have Life Insurance?

Disclaimer: This article is issued in the general public interest and is meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive and should research further or consult an expert in this regard.